12:00 TUESDAY – Stock Market Report #189 – 12/20/22
by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
STOCK MARKET RATING … 5.0 (0-4 bearish, 5 neutral, 6-10 bullish), my assessment of present and future market conditions remains unchanged at “neutral”. We can expect a lot of volatility until things settle down and a clearer vision of what is to come emerges.
The S&P 500 INDEX is down 20.4% YTD, and the NASDAQ 100 INDEX is down 33.1% YTD, both measured without the benefit of dividends paid.
While our comments on the inflation rate coming down were completely accurate, few expected the Fed to verbally respond to that so unfavorably. Most thought the Fed statement would be mild, perhaps acknowledging that their rate hikes were having some impact in diminishing the CPI uptrend. Instead, they discussed raising interest rates higher and for longer period of time than previously anticipated, ignoring the very evident downshift in the CPI data.
With the Fed following its rate decision with a speech and Q&A discussion, the market reacted strongly to what it heard. Selling began almost immediately. The market was down more than 1000 points over the final two trading days of last week. Selling has not stopped yet.
Again, Professor Jeremy Siegel appeared on CNBC saying that the Fed is going too far and is making a terrible mistake to not pause it’s series of rate hikes now, because
· it takes 12-18 months for their moves to be reflected in the inflation rate
· the housing/rent component of the index will be coming down significantly in the near-term, so future CPI reports will be coming down significantly for this factor alone.
Famed bond investor Bill Gross also said the same thing, as seen in yesterday’s N Y Times article.
PORTFOLIOS … After reading this report, if you are unsure how to position your portfolio to take advantage of these conditions, call me to discuss your circumstances and I’ll explain what ought to be done to help your situation.
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TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018 and are doing better than the market return since that time period.
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Learn from the Bible: Proverbs 15:22, 21:5, 22:3 and 27:12, Ecclesiastes 8:7, Joshua 1:9, Proverbs 3:5-6, Ephesians 1:17, 1Chronicles 29:11-13, and 1 Chronicles 12:32. I recommend you read them in this order.
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